CSLB Sting Finds Fraudulent Use of Contractor Licenses and Other Violations

Revoked licensee is one of 13 caught during Redondo Beach undercover operation

SACRAMENTO — The Contractors State License Board’s (CSLB) Statewide Investigative Fraud Team (SWIFT) teamed with the Redondo Beach Police and City Attorney’s Office, and the state Employment Development Department (EDD) for a sting operation targeting the underground economy on April 18 and 19, 2012. Three of the 13 suspects who received notices to appear in court for contracting without a license could find themselves charged with a felony for fraudulent use of a license not issued to them (Business & Professions (B&P) Code section 7027.3).

The license of one suspect, Edward Arthur Alvarez, 69, of La Mirada, was revoked by CSLB last August. He now may be subject to the same penalties as somebody with a third conviction for contracting without a license, which has a minimum mandatory sentence of 90 days and a maximum of up to $10,000 in fines and one year in jail.

During the undercover operation, SWIFT investigators sought bids for painting, tree service, and concrete projects at a Redondo Beach home. All 13 who bid more than $500 for labor and materials received the notices for contracting without a license (B&P Code section 7028).

Some of the suspects face additional misdemeanor charges for soliciting an excessive down payment (B&P Code section 7059.5(a)(3)(b)) for requesting more than the legal down payment: $1,000 or 10 percent of the contract price, whichever is less. Illegal advertising (B&P Code section 7027.1) is another common violation cited in CSLB stings. Contractors must place their license number in all advertisements. Those without a license may advertise to do jobs valued at less than $500, but the ads must state that they are not a licensed contractor. Most of those cited at the sting will also be subject to EDD audits and be required to register as employers.

"CSLB, our partner state agencies, and the city of Redondo Beach are serious about going after this underground economic activity," said CSLB Registrar Steve Sands. "Activity that puts consumers at risk and undercuts legitimate, licensed contractors that follow state laws and regulations will not be tolerated."

Don’t pay more than 10 percent or $1,000, whichever is less, as a down payment. There is an exception for about two dozen licensees who carry special bonds to protect consumers. These exceptions are noted on CSLB’s website.

Don’t pay in cash, and don’t let payments get ahead of the work.

Get at least three bids, check references, and get a written contract.

The Contractors State License Board operates under the umbrella of the California Department of Consumer Affairs. More information and publications about hiring contractors are available on the CSLB website or by calling 800-321-CSLB (2752). You can also sign up for CSLB email alerts. CSLB licenses and regulates California's 300,000 contractors, and is regarded as one of the leading consumer protection agencies in the United States. In fiscal year 2010-11, CSLB helped recover nearly $45 million in ordered restitution for consumers.

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